TourMaG.com – Could you remind us how Hiscox entered the tourism insurance market?
Astrid-Marie Pirson: Hiscox is an Anglo-Saxon company, which established itself on the French market about 25 years ago.
We have been offering professional insurance for twenty years, but we arrived in France through private clients and art collections.
Since the Brexit decision, we have also been established within the European Union, with a portfolio that globally brings together two major specialties: on the one hand, private customers, with art collections, beautiful residences, vehicles of collection, etc. And on the other hand, professional insurance made up of products with a very strong specialist DNA: cyber, insurance for tourism and IT professionals, kidnapping-ransom insurance, directors’ liability, etc.
We have a very different approach from a general insurer, from one profession to a product. This is how we arrived in this market and it is the proposition that we make to our customers, that of knowing them well and supporting them with our level of expertise and services, at the time of subscription as at the time of claims management.
This is obviously the case for tourism, a sector for which we have been providing professional civil liability (RC Pro) since 2006.
We cover the risks that are linked to claims by third parties against the travel agency or the tour operator, for something that has not been done correctly or because of the automatic liability regime. which exists in France in this sector.
At the same time, we also offer tourism professionals our entire range: cyber, directors’ liability, damage to property, etc.
A refocusing on VSEs and SMEs “for reasons of profitability”
TourMaG.com – So you have entered the tourism market with the RC Pro. How many insureds do you have today?
Astrid-Marie Pirson: We have several thousand contracts, but given that we are a European company, it is difficult for me to give you precise answers.
On the other hand, I can tell you that according to a study that we carry out regularly, we have more than 50% of market share in RC Pro Tourisme in France, knowing that it is a market subject to obligation of insurance, therefore very well equipped.
We are in different percentages all the same, depending on whether we are talking about the number of customers or the volume of premiums, because the strategy differs.
Let me explain: when we created this product 15 years ago, it was aimed at all tourism professionals, for companies of all sizes.
And we “grabbed” all segments of the market, including companies that had more than € 50 million in annual business volume and for which we had a very large market share in terms of numbers. This is the situation we were in 7 to 8 years ago.
But for profitability reasons, we have had to refocus our strategy on our core business, namely VSEs and SMEs.
These are companies that we know well, to whom we know how to talk and that we are better able to support. As a result, we have slowly pulled away from a number of risks.
TourMaG.com – Why are these “big” companies less profitable?
Astrid-Marie Pirson: These companies do more business, but they are also more often affected by their very strong activity. To the frequency of claims, we must also add the intensity of claims with heavy bodily injury and therefore very high compensation amounts.
And the full responsibility, which is very well known to users, means that this sector has a lot of complaints, not necessarily large amounts, but in large numbers.
Customers very often tend to try to make a claim against their travel agency when they are not satisfied and we have an extremely high frequency of claims, often with aspects of bodily injury, for increasing amounts. and very substantial, which take a long time to be managed, sometimes more than ten years.
This represents a very long term exposure for us, much more than what we see for companies with lower turnover, which have modes of operation that we are more used to managing.
“The terminated contracts correspond to 1% of our portfolio”
TourMaG.com – It is for this reason that Hiscox France has decided this year to end the contracts of companies with more than € 30M in business volume, as Jean-Pierre Mas, the president, told us. of Travel Companies (EDV), in a recent interview ?
Astrid-Marie Pirson: This is a complicated decision because it comes in a period of crisis, even if it is not a function of the crisis but of these profitability problems that we have been encountering for more than ten years.
We tried to get out of some risk, to have different underwriting approaches, but this is a segment that on its own made our entire line unprofitable.
This operation, which is difficult for our customers to accept, allows us to maintain a lasting position in the rest of the market that we do not at all want to leave. This allows us to support our other policyholders, without making them suffer from the impacts of the highest segment of the entire line.
I would like to point out that the contracts which are terminated correspond to 1% of our portfolio in terms of the number of policies. And that allows us to be there for the remaining 99% on acceptable terms.
TourMaG.com – So the contracts which expire on December 31st are not renewed?
Astrid-Marie Pirson: Yes. In any case, they have not been denounced and we have warned companies this summer because we know that these are complex risks to replace, since they are subject to compulsory insurance.
We know that the tourism market is complicated now, but there are players who offer products, companies will find insurance elsewhere.
TourMaG.com – The EDVs have announced that they are taking action and informing the public authorities of this situation. Have either of them contacted you about this?
Astrid-Marie Pirson: Absolutely not. But as long as we are in a market where the offer still exists, there are solutions for these companies, even if I do not know under what financial conditions they will be able to insure themselves.
I understand that it is very anxiety-provoking to see his insurance contract terminated in the current context, but we have learned that one of our competitors is launching an offer for tourism professionals this year.
So from the moment when offers exist and when we are not on the terminations of portfolios that concern thousands of risks that will return to nature, I do not think there is anything to worry about for these companies.
However, I would point out that since your article, Hiscox France has contacted the chairman of EDV and that a discussion has been initiated to explain our decision: its origin, the part of the portfolio concerned, the solutions envisaged, etc.
A premium reduction for the year 2020
TourMaG.com – More generally, has the Covid crisis changed the way you operate this year? What impacts has it had on the management of RC Pro tourisme?
Astrid-Marie Pirson: It is certain that following the very first weeks of confinement, the frequency of claims reporting increased, especially with all the emergency actions to be put in place.
Then, the tourism industry was shut down for three months, and it picked up again with a much smaller travel offer. This has necessarily had an impact for us, in the sense that if there are fewer travelers, there are fewer people likely to make complaints.
We are monitoring this situation very closely. We have tried to support our policyholders as best as possible, in a transparent manner by communicating upstream on what was covered by the policy and what was not, the measures put in place, also in coordination with the brokers.
We also contributed to the coronavirus solidarity fund, of € 400 million, like most insurers who are members of the French Insurance Federation. In particular, it will help the tourism sector, since it is one of the most affected by the crisis.
With our RC Pro, we also offer legal protection guarantees and we have therefore worked with our legal protection partner to answer questions from policyholders.
We also granted them a premium reduction in 2020, despite the profitability problems we had. We did not want to penalize all of our policyholders.
TourMaG.com – How was this reduction calculated?
Astrid-Marie Pirson: It depends on the different portfolio segments and the forecasted turnover of each other, because some have done better than others. We did this to try to help them in the short term, and despite the fact that some of them cause us profitability problems.
Because, like all companies, we have also suffered the repercussions of the crisis and on lines that have not been profitable with us for a long time, we had to put in place measures to be able to support the rest of the companies.
Tourism is a line which, every year for ten years, costs us money. For one euro of premium subscribed, we paid in fine a euro and dust. It was costing us more than the turnover we were getting and could not last.
TourMaG.com – Have you also planned measures for 2021?
Astrid-Marie Pirson: We also plan to put things in place to continue to support our clients while being able to generate acceptable technical results.
We are not going to make a premium reduction for 2021, because I hope the year will be less difficult than 2020 and because we have to continue these corrective operations on the line.
Anyway, there is no question for us at this stage of disengaging from the tourism sector.
We want to continue to support our policyholders, especially the large number of “small” policyholders who will still be very heckled in the coming months. And it is by removing these 1% of insureds that we will be able to do this for the months and years to come.
TourrMaG.com – Regarding the operating losses of 2020, does Hiscox offer compensation?
Astrid-Marie Pirson: Operating losses are not covered under a RC Pro contract, which is intended to cover the consequences of third party claims against the insured, concerning the quality of the service provided.
It is not intended to cover the premises of the insured, or his operating losses or his vehicle fleet. It is a question of the scope of the contract.
The fact that tourism professionals are likely to be compensated for part of their operating losses for damage to property depends on their insurance contract, but most insurance contracts in France do not provide for compensation for business interruption if there is no material damage. In any case, certainly not in the context of the RC Pro.
The crisis “shows how much we need insurance”
TourMaG.com – There is no insurance against pandemics either?
Astrid-Marie Pirson: No, it didn’t exist, but it’s interesting to see that on the occasion of events like this, insurance must work to reinvent itself, with States of course.
All the same, in France, we have a number of insurance plans which cover specific events such as natural disasters or acts of terrorism.
With the health crisis, we realized that, due to the immense impact of this pandemic on all companies, we quickly came to a limited exercise for insurers. Because the principle of insurance is pooling. If everyone has a claim at the same time, we can’t.
Today, there is not in the insurance universe or at the level of the State something that allows us to respond to the crisis we are currently experiencing.
This pandemic has therefore generated a number of discussions undertaken by the French Insurance Federation with the government to try to build something but which will only be activated for the future.
This project would have an operating mode which could be closer to those existing for terrorism and natural disasters and which would make it possible to support companies much better in the event of a new pandemic.
Neither did this insurance exist in global insurance standards, and today, in all the countries where Hiscox has offices, I know that the question arises, in the event of a new pandemic, of not being in this situation. -the.
This crisis will therefore ultimately be very fruitful in the insurance sector in the sense that it prompts us to reflect on the insurability of certain risks on which we had not necessarily reflected until then, or not in this way.
It also helps to see how badly we need the insurance. This notion of risk transfer is crucial for companies.
We also have a responsibility as an insurer, to think about how to better support these companies tomorrow, with more relevance and pricing models that make sense.
“Stay with our policyholders for the long term, including during the storm”
TourMaG.com – Hiscox France is a partner of the APST. Are you monitoring the situation of guarantee funds in France?
Astrid-Marie Pirson: If this does not affect us directly, their situation necessarily interests us since the financial guarantee is just as necessary as the RC Pro to exercise.
We know that unfortunately, a certain number of professionals will have to call upon it and it is important for us to know what it is.
TourMaG.com – Exactly, are you seeing a greater number of contract terminations with RC Pro tourisme at the end of the year?
Astrid-Marie Pirson: Not for the moment, because professionals still benefit from government aid.
As long as this aid is extended, we will not be able to measure the real impact of this crisis in the longer term on our entrepreneurial fabric.
But we know very well that this is something that we are going to see happen over the next twelve months, without knowing yet to what extent.
In the small business segment of tourism, we know that unfortunately this will not be without damage, when the ordinance has ended and the company will logically find itself once again on its own, faced with accrued charges and an activity that will probably not pick up as quickly as wanted, in addition to the impact of 2020 to be absorbed.
And despite the fact that this crisis is likely to be deep, we are ready to do what is necessary not to let go of the majority of our policyholders. We are concerned about staying with them for the long term, including during the storm.
Posted by Anaïs Borios
Journalist – TourMaG.com
See all articles by Anaïs Borios